How Dick’s Sporting Goods Decided to Change Its Gun Policy

CEO Ed Stack: “I don’t really care what the financial implication is”

Dick’s Sporting Goods Chief Executive Ed Stack speaks at The Wall Street Journal CEO Council in Washington, D.C., on Dec. 4, 2018. He said the sales weakness was partially attributed to the company’s tougher stance on guns.

Photo:
Ralph Alswang for The Wall Street Journal

By

Sarah Nassauer

Ed Stack, the chairman and chief executive of Dick’s Sporting Goods Inc., arrived at work the Monday after a gunman killed 17 people at a school in Parkland, Fla., nearly certain the outdoor retailer should limit sales of some guns.

While most weapons are sold by small independent retailers, Dick’s is one of the country’s largest sellers of guns with 861 U.S. stores. “I had written up a statement of what I thought we should do,” including raising the gun-buying age to 21 and ending sales of assault-style rifles, said Mr. Stack, speaking at a Wall Street Journal conference Tuesday.

Company executives convened the board via teleconference to explain the proposed plan, took some time to reflect, then gathered again a few days later to vote. “It was unanimous that we should do this and stand up and take a stand,” said Mr. Stack, whose family holds a controlling stake in the retailer.

Dick’s Sporting Goods Chief Executive Ed Stack talks about the 62 employees who resigned after the retailer’s move to ban assault-style weapons and raise the gun-buying age to 21.

Two weeks after the February 2018 school shooting, Dick’s announced it would end all assault-style weapons sales in all stores and stop selling guns or ammunition to anyone under 21. Other retailers, including Walmart Inc., followed suit later that day.

Since then sales at Dick’s have declined while many competitors, such as Walmart, are reporting sales increases amid a robust economy. Walmart hasn’t noted sales declines due to its decision on guns.

Dick’s expects same-store sales to fall between 3% and 4% this year, in line with the calculations it made in February, Mr. Stack said Tuesday. The vast majority of the sales weakness is due to the company’s decision on guns, he said, as those under 21 aren’t buying guns and some gun enthusiasts have stopped shopping at Dick’s. “It’s as expected.”

Sixty-two employees quit in protest, said Mr. Stack, fewer than he anticipated of the company’s roughly 40,000 workers. “We knew the blowback we would have,” said Mr. Stack, who owns guns and enjoys hunting. “I think CEOs today or companies today have to sit down and they have to say what is the right thing that we should do.”

Dick’s decision to ban some gun sales at the expense of revenue is evidence of a new type of social activism emerging among business leaders in recent years. Chief executives are speaking out on social topics from same-sex marriage to gun rights, often citing the need to be transparent about their beliefs as social media makes it hard for companies to act without attracting attention and younger workers expect companies to be involved in the pressing issues of the day.

During the WSJ CEO Council, Aetna CEO Mark Bertolini and Ed Stack, CEO of Dick’s Sporting Goods, discuss their personal experiences with guns, the corporate pressure they have put on lawmakers and the effect that pressure has had on gun control.

“You can’t hide,” Mark Bertolini, former chief executive of Aetna, said of the public and employee pressure to respond to societal and political flashpoints, also speaking at the Journal conference. Last month, the company called for the return of a $2,500 donation to Mississippi U.S. Senate candidate Cindy Hyde-Smith following comments of hers that invoked the state’s history of racist lynchings. She apologized and won the election. Mr. Bertolini has also been outspoken on the need to better control gun sales.

While sales have fallen at Dick’s in the wake of its decision to take a tougher stance on guns, profits have risen as it cut costs and replaced guns with higher-margin items in some stores, including baseball gear, kayaks and licensed sports gear. In recent months, Dick’s took guns out of 10 stores completely, a test the company is likely to expand, said Mr. Stack. Using the space for higher-margin and faster-selling items has boosted sales in those stores, he said. “Since we made the decision, we’ve raised our guidance three times.”

Mr. Stack says he is open to employees who quit in protest returning to the company.

After the February announcement, one store worker who resigned appeared on Fox News, telling the interviewer, “I respect the company, but based on this stance, I just can’t go any longer,” said Mr. Stack.

“If this young man ever wants to come back to the company, you hire him back in a second,” Mr. Stack said he had told his human resources department.

“It’s OK to have differing views as long as you can have a rational and cerebral conversation about it.”